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Valuing Property
Part of the divorce process involves splitting up marital property. In order to divide the property, you need to know what it is worth. Sometimes parties can agree to the value of an asset. If not, the property needs to be valued. Below are some means of valuing some types of property, and a few issues to keep in mind when valuing property. The Family Home and Other Real Property The Market Analysis The market analysis is usually done by a realtor who looks at the sale of similar houses in a given area over a given time frame (usually about 6 months to a year). The market analysis is generally arrived at by averaging the square footage cost of comparable houses and multiplying that number by the square footage in your home. A market analysis is usually free, but is not very accurate. It will not take into considerations any of the unique aspects of your home. Further, if a market analysis is done by a realtor who thinks he or she is going to sell your home, it is likely to come out artificially high, because the realtor wants you to believe you will make a lot by selling your home. The Appraisal An appraisal is done by a certified appraiser. It usually costs about $300.00 to $600.00. An appraisal will include a walk-through of your home in order to assess the unique aspects of the home. Do not rely upon an appraisal done in conjunction with a refinancing. Often times, those appraisals are artificially high. The Tax Value Do not rely on the value of your home as stated in your tax assessment. Those values are generally low. Netting Out Costs of Sale Do not subtract the assumed costs of selling a home when trying to determine equity unless you are really selling the home. For instance, if the agreement is that the Wife is going to stay in the home and she is going to pay the Husband his part of the home equity, the equity must be figured by simply subtracting the mortgage principal balance and any other encumbrances from the fair market value of the home. The Wife cannot also subtract estimated costs of sale such as realtor fees and closing costs. Vehicles A good way to determine the value of a vehicle is to go to www.kbb.com. The value to use for the purposes of a divorce is generally the “private party” value. Collectible cars may have to be appraised by a professional. Personal Property In most divorces, personal property such as furniture, dishes, sporting equipment, etc. does not need to be valued. First, the value of the property usually does not justify the expense of appraising the property. Second, courts will often times not address personal property. If divorcing spouses are unable to decide between themselves who gets which items of personal property, a judge may well order all property sold and the proceeds split. Gifts are not marital property. Instead, gifts belong only to the person who received the gift. Therefore, items such as the engagement ring, jewelry and sports equipment are often not part of the marital property to be divided. There are some items of personal property that do need to be appraised, such as collections, tools, guns, artwork, silver and pianos. A personal property appraiser will need to be hired. Stocks and Bonds Stocks and bonds do not need to be independently valued. However, when dividing stocks and bonds, you should keep in mind that when stocks are sold, there will be a gain or a loss on the stock, depending upon the basis of the stock or bonds. Both gains and losses have tax consequences. When dividing stocks and bonds, the tax consequences should be factored into the value. Retirement Funds Retirement funds are not “worth” their stated value. For instance, 401(k)s and IRAs cannot be liquidated without penalty until a person reaches retirement age. As an example, if a divorcing spouse has a defined benefit retirement plan, it is not “worth” its full stated value because the money generally cannot be reduced to a lump sum payment at the time of the divorce. Money payable in the future is “worth” less than money payable today. Where a defined benefit pension plan is part of a marital estate, the retirement benefit
may have to be valued by an expert, to determine the present value of the
future interest. Small Businesses and Partnerships Small businesses and partnerships will need to be valued,
by an expert. Time Shares Time shares often have no value because they are very hard to sell. Other Assets There are other assets, such as stock options, judgments, life estates, interests in irrevocable trusts, interests in family partnerships and interests in closely held businesses, that will need special consideration and often will require expert valuation. | 
